Boockvar’s Sums Up the Week’s Events
From Peter Boockvar:
Positives,
1) ADP said 90k net new private sector jobs were added, 15k above the estimate and after a 36k print in August. Positively, companies of all sizes added workers. As for pay, the median y/o/y gain for ‘job stayers’ was 3%, unchanged with August. For ‘job changers’, base pay rose 4.8% y/o/y vs 4.7% in the month before. The 3 month average is 57k vs the 6 month average of 82k and the one year average of 63k.
2) The initial filing of benefits totaled just 197k, 3k less than expected and vs 198k in the week before. The 4 week average fell to 200k from 203k. Continuing claims dropped by 11k w/o/w to 1.701mm, remaining about 200k below the trend seen last year.
3) In the Challenger September hiring/firing data, with regards to layoffs, they fell 20% y/o/y and lower by 18% m/o/m. Hiring’s rose from August but declined by 23% y/o/y. They said, “Companies are in a wait-and-see period right now. Employers are facing high energy costs, an uncertain war in Iran, a rate hike that could make hiring more expensive, plus the likelihood of surging healthcare costs. We’ve seen layoff activity subside over this year, and September continues to illustrate this point.” On the job creation side, “Hiring plans are up over the year, but we’re not seeing the surge of hiring plans that come with the holiday season, which suggests a very cautious approach.”
4) With the tweak to the PCE calculations in portfolio management, computer software and legal services, headline August PCE rose .3% as expected while the core rate was higher by .2% vs the .3% estimate. The y/o/y gains are 3.4% and 3% respectively.
5) The September ISM manufacturing index was little changed at 54.5 vs 54.6 in August but holding well above 50. Notwithstanding the little change in the headline, industry breadth weakened a touch with 12 industries reporting growth vs 15 in August. Those seeing a contraction totaled two, the same last month with the balance seeing no growth.
6) In the September National Rent Report from Apartment List, the national median NEW (as opposed to renewal which always runs well above) rental rate fell by .1% m/o/m and by .4% y/o/y. They did say though that “y/o/y growth has been steadily inching up and the vacancy rate is moving down, signaling a gradual tightening of rental market conditions.”
7) From Carnival: “The improvement in booking trends we highlighted on our last call continued to build throughout the quarter, with better close-in demand translating into higher revenues. That momentum also enabled us to raise our yield expectations for the fourth quarter.” With guidance, “For full year 2027, we are already half booked, with both occupancy and pricing at record levels. Bookings taken over our third quarter solidified this position, as we saw very healthy increases compared to last year’s levels.” And, “Demand remains broad-based, including very healthy demand for our peak summer European deployments. 2028 is also off to an excellent start at higher occupancy and even higher prices y/o/y. And our booking curve is further out than it has ever been at this point in the year.”
8) From Accenture: “Growth was broad based across markets, industries and both types of work, and we once again took significant market share…Our focus on being relevant where our clients are spending helped us capture the strong level of bookings even though the overall demand environment, including discretionary spending, did not meaningfully change.”
9) From Jabil: Their ‘Intelligent Infrastructure’ group saw revenue up 56% y/o/y and driven by “First, AI related demand remained very strong and continue to accelerate, exceeding the significant growth we had already incorporated in our June outlook. Second, capacity came online sooner than planned and customer ramps progressed better than anticipated, allowing us to support that higher level of demand.”
10) From Micron: Positive for them, “As strong as fiscal 2026 was, we expect fiscal 2027 to be even better. Industry demand has strengthened since our last earnings call, and we expect memory and storage supply-demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026.”
11) From CarMax: “Used unit comps grew 13%, driven largely by improved price competitiveness.” On their consumer, “affordability is on everyone’s mind. If you look at every single discussion around that…and our focus on having incredibly competitive pricing. And the other word I would say about the consumer is resilient, at the end of the day. Across all the different spectrums, at the lower end consumer to the higher end consumer, we’re definitely seeing resiliency there. I mean, the broader industry is down 1% or flat to 1%, and we posted comps at 13%.
12) The September global manufacturing PMI’s seeing a m/o/m lift, Taiwan 56.7 vs 54.7, South Korea 53.9 vs 52.3, India 55.1 vs 52.8, Thailand 54.3 vs 53.8, Indonesia 52.4 vs 49.8, the Eurozone 52.9 vs 52.7 and in the UK 51.9 vs 51.7.
13) China’s more private sector weighted PMI improved in September with manufacturing at 52.1 from 51.5 and services up a touch to 51.6 from 51.4.
Negatives,
1) Payrolls were softer than expected, rising 29k in September and below the estimate of 90k. The prior two months were revised down by a total of 60k. Of this, private sector jobs grew by 46k vs 89k in the month before (down from the initial print of 127k) with a drop in government. The household survey reflected strong job growth, though this is a very volatile monthly number, rising by 406k but because it didn’t keep up with the rise in the labor force of 485k, the unemployment rate ticked up to 4.2% from 4.1%. Hours worked were unchanged at 34.4 while average hourly earnings disappointed with just a one tenth m/o/m gain and higher by 3% y/o/y. Combine the two and average weekly earnings were up 4.2%. The all in U6 rate though fell one tenth to 7.6%. Seen in the rise in the labor force, the participation rate was up by 2 tenths to 61.8% and that matches the most since March. The key 25-54 yr old cohort saw an unchanged participation rate of 83.4%. Smoothing out the monthly volatility, the 3 month job gain average is 51k vs the 6 month average of 66k and the 12 month average of 41k. For perspective, in 2019 the monthly job gains were 165k.
2) August job openings shrunk to 7.079mm from 7.335mm in the month before. The hiring rate was 3.3%, up from 3.2% in July and vs 3.4% in June and 3.3% in May, hovering around the lowest since the early 2010’s. The quit rate was unchanged at 1.9%.
3) Income growth in August was only .2% m/o/m vs the estimate of up .5% and July was revised down by a tenth to a .3% gain. Private sector wages and salaries were higher by .3% m/o/m. Spending was as forecasted, rising by .9% m/o/m helped by both goods and services, particularly on gasoline and healthcare. The difference was another drop in the savings rate to 4.1% from 4.6% and that is the lowest since September 2008 not including Covid.
4) The September consumer confidence index from the Conference Board fell to 81.9 from 88.6 and that was 7 pts below expectations. This is a level last seen in 2014 but when it was still accelerating post GFC. The Present Situation declined by 8 pts and the Expectations component was lower by 6 pts. A major factor in this decline, one year inflation expectations rose to 6.1% from 5.8%. Also negatively impacting the mood, there was softness in the labor market questions. Spending intentions were down for the big tickets items such as vehicles and homes.
5) Auto sales in September totaled 15.98mm at a SAAR. That’s below the estimate of 16.3mm and compares with 16.39mm in September 2025 and vs 17.19mm in September 2019.
6) The MBA said the average 30 yr mortgage rate rose to 7.3% from 7.12% in the week before and vs 6.79% one month ago. In response, purchase applications fell 4.3% w/o/w and down 14% y/o/y. Refi’s were lower for a 6th straight week, down 8.7% w/o/w and by 56% y/o/y.
7) Good news for those that own a home but if the housing market is going to cushion the blow of higher mortgage rates in terms of affordability and jump start the pace of transactions, we need lower prices. In July S&P Cotality said its national home price index rose by another .3% m/o/m and by 1.9% y/o/y.
8) Container shipping prices were little changed from Shanghai to both NY and LA, though hovering around the highest since June 2022.
9) The high yield CCC spread now trades above 1000 bps.
10) As seen with a 24 yr high touched in yields, at least in France investors are worried about debts and deficits.
11) From Nike: “Overall, there’s a lack of energy in the lifestyle space right now, which is impacting traffic. Yes, the consumer is cautious, but as the leader in the industry, it’s on us to bring more creativity to sportswear.”
12) From McCormick: “Geopolitical volatility, elevated fuel costs, and persistent inflation continue to influence consumer confidence and spending. In the US, higher gas prices and the Cyclospora outbreak have added pressure and contributed to softer traffic across foodservice and grocery channels…Consumers continue to look for practical ways to manage their budgets, including using what’s already in their pantry, repurposing leftovers, and seeking simple, affordable ways to add flavor at home. At the same time, flavor exploration, health and wellness, and affordable indulgence remain important priorities, supporting demand for flavorful, convenient meal solutions across retail and foodservice.”
13) From Conagra: “Consumers continue to be thoughtful about where they spend their dollars, and we’re managing through a volatile input cost environment…Convenience store is an example that’s been a bit more pressured in recent months because of the gas prices. But overall, I would say the consumer has been relatively stable and resilient.” Also, “Inflation, inclusive of both core inflation and our tariff wrap, came in at roughly 5% in Q1. While still elevated, we saw favorability relative to our expectations primarily in proteins. However, we also saw an acceleration in fuel and logistics costs throughout the quarter, which we expect to further impact Q2 and the remainder of the year.”
14) From Jabil: With respect to memory and semi’s, “We’re seeing real constraints today. Memory in particular is being reallocated towards AI and hyperscale demand, tightening supply across many of the diversified end markets that we serve.”
15) Tokyo inflation in September rose 3% y/o/y ex food and energy and that was well above the estimate of 2.5% and up from 2% in August.
16) The September Eurozone CPI was up 3.8% y/o/y, one tenth above the estimate and up from 3.2% in August. The core rate rose 2.5% as expected.
17) The September global manufacturing PMI’s seeing a m/o/m decline, Japan 54.1 vs 54.9, Australia 49.6 vs 52, Vietnam 51.9, 53.3, Malaysia 49.9 vs 50.2, and the Philippines 49.6 vs 54.9.
18) The August 3.6% gain in Australia’s trimmed mean CPI validated the rate hike seen to 4.6% by the RBA.
19) The September Eurozone Economic Confidence index fell to 97.9 from 98.4 and vs 97.1 in July. Manufacturing keeps improving and services ticked up but consumer confidence slipped as did retail. Construction was unchanged.
Position: None
